A

STUDY ON

TAX SAVING SCHEMES WITH REFERENCE TO HDFC BANK

LTD., HYDERABAD

Project Synopsis submitted in partial fulfillment for the award

of the Degree of

MASTER OF BUSINESS ADMINISTRATION

By

P. VAISHNAVI

212222672099

AURORA’S POST- GRADUATE COLLEGE (MBA)

Punjagutta, Hyderabad – 500082

(2023-24)
 AURORA’S POST-GRADUATE COLLEGE (MBA)

PROJECT SYNOPSIS

1. Name of the Student : P. VAISHNAVI

2. Course : MBA(FINANCE)

3. Academic Year : 2022-2024

4. Hall Ticket No :212222672099

5. Title of the Project :A study on Tax Saving Schemes with reference to

HDFC Bank Ltd., Hyderabad.

6. Name of the Guide :Mrs. SHILPA SUBEDAR

7. Date of Submission :18-01-2024

Signature of the Student Signature of the Guide

College Seal
 TABLE OF CONTENTS

S. No. CONTENTS Page No

1 Introduction 1

2 Review of Literature 2-11

3 Objectives of the Study 12

4 Statement of the Problem 13

6 Research Methodology 14-18

 Nature of the Study
 Need of the Study
 Scope of the Study
 Data Collection
Methods
 Tools for Analysis
7 Industry Profile 19

8 Company Profile 20

9 Chapterisation 21

Bibliography 22
 INTRODUCTION

A tax is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by

a state or the functional equivalent of a state such that failure to pay is punishable by law.

Taxes are also imposed by many administrative divisions. Taxes consist of direct or indirect taxes

and may be paid in money or as its labor equivalent.

TAX SAVING SCHEME

In the care of close ended fund, the investors have to look their funds with the trust for particular

periods of time as a specified y the terms of the offer. The main problem for the investor is that

they cannot move in out of the fund freely.

 In the case of Closed –Ended schemes the prices of the units are calculated in the same

manner as in the case of Open – Ended schemes. However these Schemes do not charge an

Entry/ Exit load as in the case of open – ended scheme. In this scheme main advantage is

that the investor can claim for the tax saving.

 This one on the other same to the closed – ended scheme but one extra feature is in this that

the tax saving he can claim that under the section 80C for this the investor has to through

with the tax brackets.

 REVIEW OF LITRATURE

ARTICLE: 1

Tile: A Study on the Performance of Selected Tax Saving Mutual Fund Schemes During

2007-2012

Author: Joy Das

Source: SSRN Electronic Journal

Abstract

The Indian capital market also witnessed a significant institutional development in the form of a

diversified structure of mutual fund in the last decades. A wide variety of mutual funds schemes

have also been developed by the fund-managers to attract the investors. Tax-saving mutual funds

are one of this types which attracts the customers where the tax-payer gets a deduction under

section 80C of Income Tax Act. Against this backdrop, in the present study, an attempt has been

made to analyze the performance of various tax saving mutual funds schemes, so that the investors

can know about performance of schemes offered to them. For this, a sample of five Tax Gain

growth type mutual funds schemes of five different companies have been selected to investigate the

overall performance of the tax saving mutual funds schemes during 2007-12. Apart from β index,

Sharpe and Treynor’s measures are used to measure the extent of systematic risk associated with

the specific sample scheme. The paper concluded that there is no significant differences exist in the

performance of selected mutual fund schemes over the period of study.

ARTICLE: 2

Tile: Performance of Tax Saving Mutual Fund Schemes: A Case Study of Selected asset

Management Companies Operating in India

Source: Design Engineering (Toronto)

Author: Jitendra Kumar

The financial system of a nation plays a critical and pivotal role in its economic development and

growth. The Government of India launched the Equity Linked Savings Scheme (ELSS) in 1992 to

promote investment culture. Equity mutual funds, also known as tax-saving mutual funds, are a

popular way for small investors to pool their risk resources. Investments in the program are tax-

deductible. As a result, this research has been settled upon to meet the investors' objectives. The

study aims to examine the success of ten Asset Management Companies (AMCs) tax-saving

schemes over ten years, from 2011-12 to 2019-20. ELSS funds' Net Asset Values (NAVs) are

compared to a benchmark measure. Statistical tools such as expected return, standard deviation,

beta, and the Treynor, Sharpe, and Jensen risk-adjusted-performance processes are utilized.

According to the study, some mutual fund strategies outperformed their market returns, while

others underperformed and delivered poor results. By using Sharpe, Treynor, Jensen, and Eugene

Fama performance measures to compare relative performance among tax-saving mutual funds, it is

clear that the private sector has outperformed the public sector in the mutual fund industry.

ARTICLE: 3

Tile: PERFORMANCE ANALYSIS OF SELECTED TAX SAVING MUTUAL FUND

SCHEMES IN INDIA
Author: DR. AJAY SEHGAL

Source: International Research Journal of Engineering and Technology (IRJET)

Abstract

Indian mutual fund market has witnessed the immense growth in the recent period and providing

more diverse portfolios to investors to place their savings in securities to get relatively higher

return and less tax burdens. With the fact of 3 years of lock-in period and deduction under tax laws

for tax saving mutual funds, the present study attempts to analyze the performance of selected tax

saving mutual fund schemes in India over a period of more than 10 years ranging from March

2010- October 2020. The study is primarily based on the secondary data. To evaluate the

performance of selected schemes, various risk, return, and risk-adjusted tools like, average return,

beta, standard deviation, Sharpe ratio and Treynor ratio have been used in the study. To compare

the performance of selected schemes with market index, Nifty 500 has been chosen as a

benchmark. The overall results of the study have shown that all the selected schemes have yielded

positive risk-adjusted return and majority of the schemes have outperformed the benchmark index

over the period of study. The study recommends Axis Long Term Equity, BNP Paribas Long Term

Equity Fund, Invesco India Tax Plan and Canara Robeco Equity Tax Saver Fund as the top

performing tax saving schemes available for investment as well as tax planning to the investors.

Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those sectors or industries as

specified in the offer documents. E.g. Pharmaceuticals, Software.

Importance and Benefits of Tax Saving

In order to ensure that a country’s government functions smoothly and provides the resources that
its citizens need, income tax becomes an essential duty. Therefore, income taxes should not just be

considered a burden to bear but rather a responsibility to fulfill.

Every tax season, taxpayers must make sure that they file their returns and pay their fair share of

taxes. But keep in mind that the Indian government has also laid out various provisions that allow

taxpayers to make their choice of investments and shave off considerably from their taxable

incomes.

Incorporating Tax Saving Early

Every year, a growing number of working professionals are introduced to the taxation system. This

includes various recent graduates and young, fledgling professionals. These are first-time taxpayers

who are just venturing into their careers and therefore, do not have a large income to be concerned

about. Keep in mind that under our tax system, an annual income of Rs. 2.5 lakhs is entirely

exempted from tax.

It is easy at that stage in your career to not worry about tax saving being an essential part of your

income tax process. The benefits of tax saving can seem inconsequential. However, this can often

set an unfavourable precedent for years to come.

As your career grows and your income witnesses an increase, tax saving should become an

important aspect of your tax planning every year. Higher incomes are subject to higher tax rates,

which is why it is prudent to save up as much of your hard-earned income as possible. Hence, the

aspect of making crucial investments that can lower your tax burden for years to come, should be

inculcated as early in your career as possible.

Benefits of Tax Saving

There are various benefits of tax saving if it is incorporated into your tax returns every financial

year, even if your income is not substantial at present:

The primary benefit of tax saving is that incorporating tax saving investments into your portfolio

early on gives you a head-start for the future. Moreover, it gives a longer duration for your

investments to start yielding returns for a period when you might need them most. This is

particularly useful for market-linked tax saving investments such as Equity Linked Savings

Schemes (ELSS), specific tax-saving mutual funds, and Tax-Saving Fixed Deposits.

All of these tax-saving instruments benefit from long-term investment spanning several years. As

your responsibilities and needs grow in the future, their earnings can serve as excellent means of

meeting your financial requirements such as education, weddings and retirement.

OBJECTIVES OF THE STUDY

 To find out the Preferences of the investors for Asset Management Company.

 To know the Preferences for the portfolios.

 To know why one has invested or not invested in HDFC Mutual fund

 To find out the most preferred channel.

 To find out what should do to boost mutual fund industry.

VISION STATEMENT OF HDFC BANK

The HDFC Bank is committed to maintain the highest level of ethical standards, professional

integrity and regulatory compliance. HDFC Bank’s business philosophy is based on four core

values such as:-

1. Operational excellence.

2. Customer Focus.

3. Product leadership.

4. People.

The objective of the HDFC Bank is to provide its target market customers a full range of financial

products and banking services, giving the customer a one-step window for all his/her requirements.

The HDFC Bank plus and the investment advisory services programs have been designed keeping

in mind needs of customers who seeks distinct financial solutions, information and advice on

various investment avenues.

RESEARCH METHODOLOGY

NEED FOR THE STUDY

India's high tax savings rate has been a crucial driver of its economic boom, providing productive

capital and helping to fuel a virtuous cycle of higher growth, higher income and higher savings.

Since the 1990s, the gross domestic savings rate has risen steadily from an average of 23% to an

estimated high of 35% in the 2006/07 fiscal year (April-March). The latter rate compares very

favorably not only with developed economies (the US and the UK have savings rates of around
14%), but also with other emerging economies—with a few exceptions such as Malaysia (38%)

and Chile (35%).After losing their investments in stock markets in the past, small investors are

preferring risk-free small savings schemes, which saw27.33 per cent surge in collection to Rs

54,126 crore in April-August in the current fiscal from Rs 42,507 crore in April-August in the past

two fiscal years. The above plans show how the small savings are useful to the developing country

like India. Addition of rupee to rupee makes a huge amount and it is very useful to the country’s

economy. Since India’s 60%population is dependable on agriculture so these small saving plays a

great role and encourage the common man to come out for saving and this make a country

economically good.

SCOPE OF THE STUDY

The scope of the study is wide from a concept point of view because it covers major aspects of tax

savings.. However, from an empirical point of view the scope of the study is narrow covering

Hyderabad .People they know the tax saving schemes used for their future purpose.

METHODOLOGY

1. Questionnaire
 2. Personal Interview

Data Collection

 Secondary Data

Secondary Data

Secondary data is from statistics report of IKP website, Journals, various articles, books etc.

TOOLS FOR ANALYSIS:

STASTICAL TOOLS

 MEAN

 STANDARD DEVIATION

 BETA

 SHARPE MEASURE

 TREYNOR MESURE

TOOLS

 The Sharpe’s Measure

  The Treynor’s Measure

 Jenson’s Measure

The Sharpe’s Measure

In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is a ratio of

returns generated by the fund over and above risk free rate of return and the total risk associated

with it. According to Sharpe, it is the total risk of the fund that the investors are concerned about.

So, the model evaluates funds on the basis of reward per unit of total risk. Symbolically, it can be

written as:

Sharpe Index (Si) = (Ri – Rf)/Si

The Treynor’s Measure

Developed by Jack Treynor, this performance measure evaluates funds on the basis of Treynor's

Index. This Index is a ratio of return generated by the fund over and above risk free rate of return

(generally taken to be the return on securities backed by the government, as there is no credit risk

associated), during a given period and systematic risk associated with it (beta). Symbolically, it can

be represented as:

Treynor's index (Ti) = (Ri - Rf)/Bi .

Jenson’s Measure
Jenson’s model proposes another risk adjusted performance measure.

This measure was developed by Michael Jenson and is sometimes referred to as the Differential

Return Method. This measure involves evaluation of the returns that the fund has generated was the

returns actually expected out of the fund given the level of its systematic risk. The surplus between

the two returns is called Alpha, which measures the performance of a fund compared with the

actual returns over the period. Required return of a fund at a given level of risk (Bi) can be

calculated as:

Ri = Rf+ Bi (Rm – Rf)

LIMITATIONS OF THE STUDY

 Some of the persons were not so responsive.

 Possibility of error in data collection because many of investors may have not given actual

answers of my questionnaire.

 Some respondents were reluctant to divulge personal information which can affect the validity

of all responses.

 The research is confined to a certain part of Hyderabad.

 COMPANY PROFILE

SLOGAN “We Understand Your World”

FORMATION OF THE COMPANY

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive

an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private

sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was

incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in

Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January

1995.

PROMOTER
HDFC is India's premier housing finance company and enjoys an impeccable track record in India

as well as in international markets. Since its inception in 1977, the Corporation has maintained a

consistent and healthy growth in its operations to remain the market leader in mortgages. Its

outstanding loan portfolio covers well over a million dwelling units. HDFC has developed

significant expertise in retail mortgage loans to different market segments and also has a large

corporate client base for its housing related credit facilities. With its experience in the financial

markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC

was ideally positioned to promote a bank in the Indian environment.

BUSINESS FOCUS

HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound

customer franchises across distinct businesses so as to be the preferred provider of banking services

for target retail and wholesale customer segments, and to achieve healthy growth in profitability,

consistent with the bank's risk appetite. The bank is committed to maintain the highest level of

ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC

Bank's business philosophy is based on four core values – Operational Excellence, Customer

Focus, Product Leadership and People.

CAPITAL STRUCTURE

The authorized capital of HDFC Bank is Rs550 crore (Rs5.5 billion). The paid-up capital is

Rs424.6 crore (Rs.4.2 billion). The HDFC Group holds 19.4% of the bank's equity and about17.6%

of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares

(ADS) Issue). Roughly 28% of the equity is held by Foreign Institutional Investors (FIIs) and the

bank has about 570,000 shareholders. The shares are listed on the Stock Exchange, Mumbai and

the National Stock Exchange. The bank's American Depository Shares are listed on the New York
Stock Exchange (NYSE) under the symbol 'HDB'. Advantage and build market share.

MISSION

 World Class Indian Bank

 Benchmarking against international standards.

 To build sound customer franchises across distinct businesses

 Best practices in terms of product offerings, technology, service levels, risk management

and audit & compliance

CHAPTERIZATION

CHAPTER -1 – INTRODUCTION

In this first chapter will provide introduction of the topic and need, scope, objectives of the study.

Project limitations and methodology of the study.

CHAPTER - 2- REVIEW OF LITERATURE

This chapter includes different authors written articles and brief explanation of the topic.

CHAPTER - 3 - INDUSTRY PROFILE & COMPANY PROFILE

This chapter gives a snapshot of a single company track record and specific business industry

based on data that includes trends and areas of growth.

CHAPTER - 4 - DATA ANALYSIS AND INTERPRETATION

This chapter includes the process of uncovering patterns and trends in the data and assigning

meaning to the data.

CHAPTER- 5 - FINDINGS, SUGGESTIONS, CONCLUSION

This chapter includes the basic findings of the study and required suggestions based on study

BIBILOGRAPHY

Text books:
 Portfolio management – Avadhani
 Security analysis and portfolio management – Vikas publications
 Investment management – Preethi singh

Journals :
 http://www.rroij.com/open-access/article-on-portfolio-management.pdf
 http://ssijmar.in/vol2no5/vol2%20no5.10.pdf
 http://ijarcsms.com/docs/paper/volume3/issue2/V3I2-0084.pdf

Websites:
 http://www.moneycontrol.com
 http://www.economictimes.com
 https://www.karvy.com
 www.bloombergquint.com
 https://www.nseindia.com
 https://www.investopedia.com/terms/p/portfoliomanagement.asp
 FINDINGS

1) A wide variety of mutual funds schemes have also been developed by the
fundmanagers to attract the investors. Tax-saving mutual funds are one of
this which attracts the customers where the tax-payer gets a deduction under
section 80C of Income Tax Act.

2) Investments in the program are tax-deductible. As a result, this research has

been settled upon to meet the investors' objectives.

3) Indian mutual fund market has witnessed the immense growth in the recent
period and providing more diverse portfolios to investors to place their
savings in securities to get relatively higher return and less tax burdens.

CONCLUSION :

The basic objective of my research was to find out the preferences of the investors for asset
management company. To know the preferences for the portfolios. The primary benefit of tax
saving is that incorporating tax saving investments in your portfolio early on gives you a head start
for the future. Moreover, it gives a longer duration for your investments to start yielding returns for
a period when you might need them most.
SUGGESTIONS :

1. Investment in tax-saving instruments (EPF, PPF...)

2. Selection of appropriate components in the salary structure offered by employer

3. Increase in retirement fund contribution

4. Tax benefits on a home loan

5. Filing of tax returns within the specified timelines.