When you are aware of your surroundings, you make better decisions in life. Here are the three stories from the last week that we think you should know about.
Read on to find out what implications businesses or investors might have in each case.
Remember the last broken laptop or mobile phone that you sold off? And you do it after every few years, right? Ever wondered where they go post you dump it? Well to the electronic graveyards.
Understanding the recycling industry These e-graveyards strip off your dumped devices to extract usable materials. Generally, these electronic devices contain 50% iron and steel, 20% plastic, and 13% copper, aluminum, and precious metals like gold and silver. The worrying part is the hazardous substances that are present, like lithium, and mercury.
Currently, the recycling industry is served by both formal and informal sectors, with the formal sector handling only 15-20% of the business.
The formal sector has a well-laid down process, where the e-waste aggregators, after collection, send it to the recyclers, and then it is sent back to the industry for use in electronics.
And there is a lot of money minting here: a tonne of discarded cell phones and computers can give you 280 grams of gold worth around 16 lacs.
Informal groups generally consist of low-income groups who use age-old and risky methods to extract metals from them. It exposes workers to burns and also contaminates the water, soil, and air around us. Further, these pollutants can cause damage to our respiratory system, disturb our food streams, and even lead to cancer.
Currently, India is the 3rd largest source of e-waste. Indians buy close to 200 million electronic devices every year, which in a few years are dumped by us.
A sustainable solution here is the prevention of e-waste: how to get manufacturers to develop devices that use environmental friendly materials and also with a longer life span. Also, educating the consumers on how they should be responsibly dumping these products and ensuring that it goes to the formal sector for efficient recycling.
Your accumulated Employee Provident Fund (EPF) is a sum of contributions from you and your employers over your job tenure. Here, the money can be withdrawn only on retirement or after 58 years of age. There are certain exceptions like early retirement withdrawal and partial withdrawal in exceptional cases like house purchases.
Talking about returns, EPF promises to give 8.1% returns. How do they do it? They invest 85% in fixed income like government and corporate bonds and the rest 15% in equity market ETFs, mainly large caps ones.
With the increasing life expectancy, India is becoming an aging society. India's aged 60 and above population is expected to reach 194 million in 2031 from 138 million in 2021, a 41% increase over a decade. Therefore, the number of people requiring old age income and health security will rise and so will the pressure on EPFO to deliver returns.
In line with what other countries have done, EPFO plans to increase the retirement age to withdraw the money. The idea here is to get more time to accumulate the quantum to invest and increase the investment duration to compound the money.
EPF is a good to have investment due to its tax exemption status but relying solely on it for retirement might not help beat inflation and maintain the same standard of living post-retirement.
Hence, the government, and employers here can educate the masses to invest in more options like equities at an early stage of life and build up a long-term portfolio for post-retirement.
Last week, the Central Board of Direct Taxes (CBDT) mentioned that participants of an Indian gaming company have won Rs 58,000 crore over the past 3 years. But they have not paid the taxes worth Rs 20,000 crore for the same. Makes you think about how costly these online games are after taxes.
For direct tax purposes, these games are classified under similar heads as winning lotteries, puzzles, and races. One has to pay a tax of 30% on any such income earned.
There is still confusion on GST because the authorities are yet to classify these games under either game of skill or game of luck. For a game of skill, the GST is 18% while for a game of luck, GST will be 28%.
Online gaming witnessed humongous growth during the pandemic with increasing internet penetration. Around 433 million of the 846 million internet users play games in India. This means that around 35% of the population became online gamers in 2021.
During the Feb'22 budget, the Finance ministry laid special emphasis on the online gaming industry and the role it can have in creating employment for the youth. The industry currently employs close to 45000 people.
Tax rates and how they position these games will impact the growth of the industry. To look at the global counterparts, fees from online gaming the world over are taxed in the range of 15%-18%.
Also, blanketing all such games under the game of luck might not be fair for the players who have worked hard and developed the expertise to excel in such games. The ministry needs to exercise detailed due diligence before coming up with verdicts.
If you have been listening to the Insider Investing podcast, we have an exciting update for you. A lot of our listeners were curious about how to create wealth and how the wealthy invest. So here it is, Create Wealth, our new podcast.
For our first episode, we are in conversation with Aashish P Somaiyaa on his definition of wealth and how sales played an important role in his wealth creation journey.