13 Indian states that have announced policies to encourage EVs

 13 Indian states that have announced policies to encourage EVs

  

Popular electronic vehicle maker, Tesla recently announced its Indian debut by registering an Indian entity, Tesla India Motors and Energy Private Limited. Tesla Founder Elon Musk had indicated the company’s plans of entering the Indian market in 2021.

With Tesla’s entry, Karnataka has reinforced its position as one of the foremost states bringing in electronic vehicles to the country. Ola Electric, Mahindra Electric and smart scooter company Ather Electrical have all set up their R&D centres and firms in the state.

PM Narendra Modi had set an ambitious target of ensuring that 30 per cent of all vehicles sold in India are electric by 2030. As per estimates, India is expected to become the fourth largest market for EVs by 2040.

While FM Nirmala Sitharaman has not announced any new policy for the EV sector in the recently announced Union Budget 2021, EVs will be exempted from the proposed Green tax to be levied on petrol and diesel vehicles for registration renewal after 15 years. The Scrappage policy announced by the Finance Ministry, which will pave the way for newer automobiles, is also being seen as a positive sign for EVs.

States across the country are doing their bit to push EV adoption and attract investments for EV infrastructure. Let’s take a look at what states are doing to attract EVs.

Bihar (draft): The state’s EV policy, which was drafted in 2019, aims at converting all manual peddle rickshaws to e-rickshaws by 2022. It also aims at creating fast charging/swapping stations at intervals of 50 km on state and national highways, attracting ground investments of Rs 2,500 crore and creating employment opportunities for 10,000 people.

The policy plans to provide subsidies of INR 12,000 to the end-user. Special incentives of Rs 10,000 will be given on electric rickshaws using a Lithium-ion battery instead of the conventional lead-acid battery. EVs will also be eligible for exemption from road tax and registration fees.

 

Delhi (approved): Delhi’s EV policy is focused on improving the NCT’s extremely poor air quality. The policy aims to ensure that EVs account for 25 per cent of total vehicle registrations in the city by 2024. Owners of the first 1000 e-cars to be registered in New Delhi will get a purchase incentive pf Rs 10,000 per kWh of battery capacity.

The Delhi Government also aims to convert 50 per cent of buses to electric by 2024 and increase this to 100 per cent by 2030. The policy offers subsidies of up to Rs 30,000 on two-wheelers and up to Rs 1.5 lakhs for cars. The Government also plans to offer subsidies worth 25 per cent of the cost (up to Rs 5,500) for Ecycles, along with an additional offer of Rs 2,000 for the first 10,000 e-cycles.

Andhra Pradesh (approved): The state’s EV policy plans to bring in 10 lakh EVs by 2024. This would include converting all the 11,000 buses under the Andhra Pradesh State Road Transport Corporation (APSTRC) fleet into EVs by 2029.

It aims to set up 1 lakh slow and fast charging stations by 2024, attract investments worth Rs 30,000 crores, while generating 60,000 jobs in the electronic vehicle sector. Plans are also on to set up a Centre for Advanced Automotive Research, in collaboration with IISER, IITs and ISRO for research in chemical, mechanical, electrical and electronics engineering to drive the policy.

Gujarat (draft): Gujarat’s EV policy aims to establish a conducive environment to encourage manufacturers and investors to develop the EV market. The Government plans to have 1 lakh EVs on the road by 2022. This includes 80,000 two-wheelers, 14,000 three-wheelers, 1,500 buses and other transport vehicles and 4,500 four-wheelers, which include commercial taxis and cargo.

Financial subsidies include 100 per cent exemption from the registration fee, 50 per cent exemption from motor vehicle tax, along with a 100 per cent exemption from electricity duty for EV charging stations.

 Kerala (approved): The state has rolled out a rather ambitious plan of reaching 10 lakh electronic vehicles by 2022. This would include 3,000 buses, 2 lakh two-wheelers, 50,000 three-wheelers, 1,000 goods carriers and 100 ferries.

The Government has also shortlisted tourist spots such as Bekal, Munnar and Kovalam, along with the Secretariat, Infopark and Technopark in Thiruvananthapuram for the introduction of e-scooters and e-bikes. The state witnessed a 64 per cent rise in EV registration in 2020 (1,321 EVs), compared to 2019 (468 EVs).

Himachal Pradesh (draft): The state’s draft EV policy aims to achieve 100 per cent transition to EVs by 2030. The policy proposes a business model for private players to set up charging stations and infrastructure for EVs in the state, along with EV charging point provisions in commercial buildings.

The policy also encourages the use of hybrid EVs by Government entities during the transition period, along with creating newer employment opportunities.

 Karnataka (approved): The state was the first to roll out an EV policy in 2017, with the intention of making Bengaluru the EV capital of the country. The Karnataka Electric Vehicle and Energy Storage Policy looks at achieving 100 per cent electric mobility by 2030, in certain segments such as auto-rickshaws, cab aggregators, corporate fleets and school buses/vans.

The Karnataka Government has also recommended offering subsidies worth 20 per cent or Rs 10 lakhs, whichever is greater, to individuals looking to set up charging stations. Currently, there are only around 10,000 electric vehicles in Bengaluru.

Madhya Pradesh (approved): The state’s policy focuses on ensuring EVs contribute to 25 per cent of all new public transport vehicles by 2026. People buying electric vehicles for commercial purposes would be assured a free parking spot in a Government parking lot for a period of five years. While this excludes buses, it extends to autorickshaws, two-wheelers and taxis.

To ensure adequate charging infrastructure, setting up of public charging stations (PCS) will be de-licensed. This will allow any individual or company to set up public charging stations, provided they meet the regulations. Charging fees will also be lower, at Rs 6/unit at public charging points. The MP Government’s EV policy also waives off-road tax/registration fee for the initial five years.

 Maharashtra (approved): The state announced its EV policy in 2018, however its adoption has been slow. With the 18 cities in the state heavily polluted, the Government is planning to encourage the use of EVs for public and private use.

The policy aims to increase the number of EVs registered in the state to 5 lacs and create an investment of Rs 25,000 crores in EV, EV manufacturing and component manufacturing, and charging infrastructure equipment manufacturing in the state.

The policy exempts EVs from road tax and registration fees for a period of five years. It also aims to provide incentives for micro, small and medium enterprises, as well as large manufacturing units.

Punjab (draft): Under the Punjab Electric Vehicles Policy, 2019, the Government aims to have 25 per cent of annual vehicle registrations as EVs by the last year of the five year policy. It also aims to increase the share of electric two-wheelers to reach 25 per cent of new sales over the five year period.

The policy provides for 100 per cent waiver on motor vehicle tax for private EVs for a period of five years. For commercial vehicles, the exemption will extend to registration as well as permit fee for five years. The waiver will be applicable for a period of ten years for vehicles manufactured in Punjab.

 Tamil Nadu (approved): A major automobile manufacturing hub, Tamil Nadu has waived off motor vehicle tax for battery-operated vehicles for a period of two years from November 1, 2020, to December 31, 2022. Tamil Nadu is targeting investments of about Rs 50,000 crore in the EV segment and is also planning to set up the country’s first park catering for electronic vehicle production.

Under its EV policy, Tamil Nadu plans to electrify 5 per cent of buses by 2030 and convert all auto-rickshaws in six major cities to electric within 10 years. It also plans to set up a business incubation service to encourage EV startups.

Uttar Pradesh (approved): The state’s EV policy aims to roll out nearly 10 lakh EVs across all segments by 2024. Plans of phasing out all commercial fleet and logistics vehicles and attaining 50 per cent EV mobility across goods transportation in ten EV cities by 2024, and all other cities by 2030, are also on.

The state government has proposed setting up a centre for excellence for research and development, testing and certification to help the EV industry. The state also plans to launch 1,000 electric buses by 2030.

 Telangana (approved): Under its EV policy, Telangana is offering 100 per cent exemption of road tax and registration fee for the first two lakh electric two-wheelers purchased and registered within the state. The first 5,000 units of four-wheelers will get 100 per cent exemptions from road tax and registration fees.

The policy will give EV manufacturers preferential market access to set up their plants in the state. The government is also setting up an energy park in the state, along with an EV park. Currently, electric bus manufacturer Olectra Greentech and electric three-wheeler manufacturer Gayam Motor Works have their manufacturing centres in the state.

However, much more needs to be done in terms of bringing about infrastructure such as charging stations, along with policy changes such as reduction of GST on batteries, to make EVs more affordable

 

Happy Investing

Source: Yahoofinance.com

FAQ: Will I Need to Pay Income Tax on My EPF Interest From April?

 FAQ: Will I Need to Pay Income Tax on My EPF Interest From April?

  

Union Budget 2021 has proposed to levy income tax on interest earned on employee’s contribution towards the Employee Provident Fund – or EPF – if the sum is above Rs 2.5 lakh a year, or roughly Rs 20,800 per month.

“In order to rationalise tax exemption for the income earned by high income employees, it is proposed to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh,” Finance Minister Nirmala Sitharaman said on 1 February, during the Budget speech.

How will this impact salaried taxpayers? What should you know about EPF?

Who gets EPFO benefits?

The EPF, or simply PF, is a fund collected by a statutory body established by the Employees’ Provident Fund Miscellaneous Provisions Act, 1952, which benefits employees after retirement.

This scheme is available for those working in companies registered under the EPF. Every month, both employees and the employers contribute 12 percent of the employee’s basic salary and dearness allowance salary towards the employee’s PF account.

Starting from deposits to interests to withdrawal – this sum has so far been totally exempted from taxation regardless of how large the contribution is.

Who will be affected by this move?

While this is indeed a blow to salaried people, Sitharaman said the new tax is for the “big ticket money” people, not the average workers.

“The EPFO is for welfare of workers and workers will not be affected by this move. It is only for big ticket money which comes into the EPFO which has tax benefit and also assured 8 percent return,” she said.

However, experts are worried that this would reduce the benefits of tax savings, and combined with the new Wage Code, also end up reducing retirement savings.

Since only the interest earned on contributions beyond Rs 2.5 lakh annually to the PF will be taxed, it is obvious that this move will affect people with a high basic salary – of about Rs 1.73 lakh per month.

But, let’s look at the different scenarios in which it can impact people with a lower basic salary as well.

Impact of New Wage Code Combined With EPF Tax

According to the new definition of wages, as part of the Code on Wages, 2019, passed by Parliament, which is likely to come into effect from 1 April, the government has proposed to increase the employee’s contribution to PF.

But in order to abide by the new rules, the employers will have to raise the basic salary of the employee on which the EPF is calculated.

So, for those having basic salary a little lower than Rs 1.73 lakh per month, what this entails is that, because of the new Wage code, the employee not only takes a reduced in-hand salary home, but with their PF contribution crossing Rs 2.5 lakh, the EPF tax will also reduce their savings.

Impact on VPF Contributors

A report by The Economic Times also points out that those with a lower basic salary can be impacted due to contributions to the Voluntary Provident Fund (VPF).

The VPF is a voluntary contribution option with similar benefits as the EPF, available for salaried employees. The maximum limit for VPF contribution is 100 percent of the basic salary.

Let’s assume that an individual contributes equally to the EPF and VPF, that is 24 percent of their basic salary. In this case, even if their total contribution exceeds Rs 20,000 per month, they won’t be taxed so long as their basic salary is under Rs 1.73 lakh.

But if their basic salary is more than that or if they are “contributing more than 12 percent towards VPF, then you will have to either reduce your VPF contribution or pay the income tax as per the new rule,” the report points out.

Why was the decision taken?

So far, despite changes in tax regimes, the EPFO contributions were left untouched by governments.

But, speaking at the post-Budget press conference, Sitharaman explained that while the government had exempted PF contribution from being taxed in a bid to help workers, it was also felt that not taxing high amounts of contribution may not be fair.

“You find huge amounts, at times, to the extent of Rs 1 crore, each month. For somebody who puts Rs 1 crore each month, what would be his salary for him to get tax exemption and an assured return? We thought we are not reducing workers’ right but at the same time getting tax exemption and also getting 8 percent rate of interest for somebody who puts Rs 1 crore per month into the account we thought, maybe it’s not right and therefore we have put that ceiling,” she said.

Happy Investment

Source: Moneycontrol.com 

Investing lessons from crorepatis: Know what to follow and what to avoid

 Investing lessons from crorepatis: Know what to follow and what to avoid

Portfolio diversification and long-term investment commitment are great habits of the rich. But excessive focus on returns without being mindful of the risks is a negative trait.

What’s the secret to becoming rich? Most of us want a one-pointed answer to the question. Money is certainly not everything, but it’s important. Especially in these pandemic times, when jobs, incomes and careers have been ravaged. A good corpus helps us tide over such difficult times, help us repay our loans and meet our daily living expenses. We wonder what the rich have done to ensure stability and comfort in their money matters. What can we learn from them? And what is it that we shouldn’t be? Here is a special three-part series on what we can learn from the rich – the crorepatis, as we often refer to them colloquially, or high networth individuals in investment parlance. Today, let’s understand their typical investment habits.

Compounding: An investment term that means substantial growth of wealth over time. You would have heard it from your wealth advisor or read about it in every other investment literature. But many take it for granted. For instance, close to 34 percent equity assets are exited before a year. Although this was down from 43 percent in June 2015, a longer term analysis shows that not much has changed in terms of investor behavior.

The rich know better, though. Financial advisors and distributors say that they understand ‘compounding’ better than the average investor. Here’s what you can learn from them, when it comes to building wealth for you and your family.

Don’t let money remain idle

Despite being wealthy, the rich don’t let money remain idle in their bank accounts. Even if they get Rs 5 lakh – a relatively small amount for them – they, typically, won’t leave it dormant. The moment they get the cash, they invest, they are always on the lookout for investment opportunities. They may have a Rs 40 crore investment portfolio. But even if Rs 10 lakh worth of Public Provident Fund matures, the rich client would want to reinvest the proceeds, soon.

 Back-of-the-envelope calculations show that if you start a systematic investment plan (Rs 1,000 a month) at age 23, you end up with a kitty of Rs 82.75 lakh when you retire at 60. A delay of just seven years sets you back by almost Rs 47 lakh. If you were to start at age 35, you will earn only about Rs 19 lakh; an amount that is Rs 63.77 lakh less than what you would have earned had you started early.

Willing to invest globally

Indian investors are increasingly opting for international funds over the past few years. But financial advisors who Moneycontrol spoke to say that rich investors have been investing in international funds for a long time, before they became widely popular.

Vishal Dhawan, founder CEO of Plan Ahead Wealth Advisors, points to a few triggers for why the rich warmed up to international funds early on. The rich aspire to send their kids abroad for further studies. But foreign education is costly. Besides, the Indian Rupee is a depreciating currency. For instance in 2013, one US dollar was worth Rs 55. Now, it is worth Rs 74.42. “Due to a depreciating currency (Indian Rupee), investing in international funds is a good way for financing your kid’s foreign education,” says Dhawan.

Despite being biased to investing in their own domestic markets, large or experienced global investors also deploy about 10-15 percent of their assets in emerging markets such as Indian and China. “The importance of diversification is, therefore, well understood,” he adds.

Talk to experts, seek help

“It’s a fallacy to assume that just because people are rich, they have knowledge of money management. They may be experts in their own fields, but many HNIs need the help of an advisor or a wealth management firm,” says Mrin Agarwal, Founder of Finsafe India.

The proliferation of direct plans and investment websites have nudged many millennials to take the direct route, without seeking financial advice. But if you cannot tell a good investment from a bad one, you don’t create wealth in the long run – you destroy it.

 Narang narrates the tale of an old client who was an entrepreneur. As he was nearing his retirement age, he wanted to sell his company and retire. But the capital gains, at least on paper, were substantial as per his initial calculations. He worked with Narang and his chartered accountant for as long as six years, to execute a plan for reducing taxes substantially.

While there is much to learn from the rich, there are some aspects not worthy of emulation.

Focus on returns

 Pune-based financial advisor Sujata Kabraji says that HNIs, often, have a strong desire for returns. “They don’t focus as much on risks or losses made,” she says. That’s not all. A senior wealth advisor, who did not wish to be named, said that HNIs at times only think about saving taxes, instead of focusing on wealth creation. For instance, unit-linked insurance plans used to be favourites with HNIs till recently because withdrawal proceeds used to be tax-free. ULIPs lock your money for at least five years and so may may not have been the best choice for some. Budget 2021 made proceeds from ULIPs taxable if the annual premium exceeded Rs 2.5 lakh.

Getting into exotic products

What do you do if your portfolio is already well-diversified with equity, debt and gold, apart from perhaps a few bank fixed deposits, a public provident fund account and possibly some non-convertible debentures? Typically, if you have more money to invest, you should largely top-up your existing investments.

Dhawan says that here’s where the rich investor gets it wrong. “There is a strong urge to try new and exotic investments,” he says. Aside from structured products such as market-linked debentures and perpetual bonds, Agarwal adds that, at present, there is a trend to invest in incubator funds that finance start-ups.

“Investing in start-ups may sound cool, but investors need to research well. You need the expertise of a corporate finance professional who can study and analyse balance sheets of start-up firms, project their cash levels, understand the businesses in which they work and project some sort of income, to make your investment worth the while,” says Agarwal.

Happy Investing

Source: Moneycontrol.com

Need Emergency Cash During COVID? Know How to Withdraw From PPF, Bank FDs, PF, NPS

 Need Emergency Cash During COVID? Know How to Withdraw From PPF, Bank FDs, PF, NPS

  

Severe second wave of Covid-19 has hugely impacted the lives of people from all spheres. It has not only dented the health infrastructure but made it difficult for ordinary masses to meet their ends owing to the financial crunch. Several are considering premature withdrawals from their investment schemes such as Provident Fund (PPF), National Pension System (NPS) or fixed deposits (FD) in case of emergency cash requirements. As drawing money entails a detailed list of dos and don’ts, here are rules or policies related to permitted withdrawals, penal charges and taxation.

Public Provident Fund (PPF)

As per PPF guidelines, funds can be withdrawn from the PPF account only after the period of five years starting from the year it has been opened. But a maximum of 50% of the total sum can be taken out prematurely. However, the withdrawals can only be made once in a financial year.

Moreover, partial/premature withdrawals from the PPF account are exempted from tax. To withdraw the fund, one needs to fill and submit Form C in the concerned branch of the bank where the PPF account lies.

Employees’ provident Fund (EPF)

Partial withdrawal of fund from EPF account is taxable with few exceptions such as employment termination and medical emergencies. However, the withdrawal becomes tax-free after the completion of the five-year tenure.

Fixed Deposits (FDs)

In case of Fixed Deposits (FD), the depositor cannot avail the facility of premature withdrawal. He can only withdraw before time, if he closes his FD account before the date of maturity. Moreover, one has to bear penalty charges ranging from 0.5 percent to 1 percent for liquidating a fixed deposit before its stipulated time period.

National Pension System (NPS)

Under NPS, a government sponsored pension scheme, one can only withdraw the sum after the completion of three years. After three years, investors can take out only 25 percent of the total invested sum. Withdrawals under this scheme are exempted from tax.

 

Happy Investing

Source: Yahoofinance.com