February 13, 2024

Wealth is one of the measures of financial success. High-net-worth individuals (HNIs) are wealthy individuals occupying financially privileged positions in society. In India, HNIs are those with investable assets of over Rs. 5 crore.  HNIs need to invest and must have a long-term vision. Most HNIs are owners of big companies who are in positions of CEO, chairpersons, CTO, etc. Such wealthy individuals must be cautious and incorporate proper financial planning to keep up with their expensive lifestyle and ensure to preserve their capital.  That is why many private banks, financial advisors and firms play an important role in providing specialised services to help HNIs achieve their desired financial objectives. Types of HNIs in India High net worth individuals (HNIs) are classified into three categories based on their total net worth. The three types of high-net-worth individuals are: High Net Worth Individuals (HNWIs): Individual investors holding liquid assets of up to Rs. 5 crore fall under this category. Very High Net Worth Individuals (VHNWIs): Individual investors with a net worth between Rs. 5 crore and Rs. 25 crore are considered very high-net-worth individuals. Ultra High Net Worth Individuals (UHNWIs): Individual investors with a net worth above Rs. 25 crore are considered ultra-high-net-worth individuals. For Initial Public Offerings (IPOs), the Securities and Exchange Board of India (SEBI) has further categorised NIIs (HNIs) into two different categories based on the amount they are willing to invest. The two different types of NIIs are: Small NII: High net worth individual investors investing anywhere between Rs. 2 lakh to Rs. 10 lakh are categorised under this category. Big NII: individual investors investing more than Rs. 10 lakh are considered big NIIs. Who Are High Net Worth Individuals (HNIs)? A high net-worth individual (HNI) falls under the category of investors in the Indian stock market.  Individual investors exceeding its net worth value of Rs. 5 crore are categorised under high-net-worth individuals in India. These individuals are mostly business owners, corporate executives, entrepreneurs and more.  In the IPO application category, SEBI defines anyone investing an amount over Rs. 2 lakh as an HNI. Furthermore, there is a subcategory of investors bidding between Rs. 2 lakh and Rs. 10 lakh with one-third reservation of the HNI portion. The large HNIs are those investing above Rs. 10 lakh, and they have two-thirds reservation of the HNI portion.  In most cases, private wealth managers prefer working with high-net-worth individuals because of the complexity of managing wealth. HNIs demand personalised services in estate planning, planning of taxes and other financial areas. It is important to note though that the exact threshold for HNWIs varies across countries and financial institutions.  Countries with the Most High-Net-Worth Individuals As per several studies and reports, the countries with the most high net-worth individuals are the United States, Japan, China and Germany. The USA comprises the highest number of HNWIs in the world, with approximately 18 million individuals. China ranks second with approximately 4.4 million high-net-worth individuals. On the other hand, Japan constitutes around 3 million NHWIs and Germany around 1.5 million approximately.  In India, there were 7,97,714 HNI individuals with assets of over USD 1 million in 2022. The number is expected to grow considerably in the next few years.  The number of net-worth individuals varies depending on factors such as income inequality, economic growth, opportunities for investment and financial conditions. However, the distribution of HNWIs is likely to change in the upcoming years with the change in these factors over time.  What Are the Investment Options for HNIs in India? Alternative Investment: Alternative investments have become a popular option among HNIs in India. There exist numerous reasons behind this. By opting for alternative investments like private equity, fractional real estate and P2P lending, HNIs can diversify their portfolio with assets which have a low correlation to typical options like stocks and bonds. Individual investors also can earn high returns from these investments. Both skilled and professional fund managers possessing a clear understanding of the financial needs of NHIs manage these funds. If you are new and looking for the right AIF option, you should consult a financial planner first.  Portfolio Management Scheme: This is an ideal investment option to consider for HNIs. The minimum investment required here is Rs. 50 lakh. PMS schemes provide a great deal of flexibility to HNI investors. They can personalise the scheme according to their requirements. For instance, individuals can opt for concentrated bets and choose a fund manager to assist them in investing in a particular sector or region. At the same time, investors must also remain aware of the higher risks associated with these funds and decide to invest accordingly.  Market Linked Debentures (MLDs): Market Linked Debentures generally follow benchmark indices such as the gold index, equity index, G Sec yields, etc. Investors gain exposure to various market segments and avoid the risks of direct exposure to any asset. HNIs can choose this investment option especially when the market is volatile or when investors expect the market to be volatile shortly. Real Estate Funds/Commercial Real Estate: Many HNIs invest in the real estate sector for portfolio diversification. Other than directly purchasing real estate, HNIs can invest in REIT (Real Investment Investment Trusts) to invest in multiple projects. They can also invest in commercial real estate through various alternative funds. Commercial real estate is capable of delivering higher returns than residential real estate. Commercial real estate considers not only office spaces but also warehouses and shopping centres. Interested HNIs can also invest in serviced apartments or co-living spaces.  Angel Investing/Unlisted Equity: HNIs can also consider investing in start-up companies, commonly referred to as Angel investing. It would be even better if HNIs could diversify their angel investments across 8-10 companies to successfully manage high risks. HNIs can also provide support to some entrepreneurs with inputs and contact.  What Are the Key Challenges Faced by HNIs? Market Risk: HNIs investment in some market-linked investment options stays highly sensitive to price movements and volatility. Investors face a high risk of losses because of investment in risky options like hedge funds, and structured products that are more influenced by market fluctuations. Liquidity Risk: When

Revenue run rate, or sales run rate, is a financial metric that projects current revenue in a given period over a future period of time to give businesses a baseline understanding of future earnings. Companies can use weekly, monthly, or quarterly revenue data to extrapolate their annual income and inform strategic planning. What is Revenue Run Rate? Revenue Run Rate is an indicator of financial performance that takes a company’s current revenue in a certain period (a week, month, quarter, etc.) and converts it to an annual figure to get the full-year equivalent.  This metric is often used by rapidly growing companies, as data that’s even a few months old can understate the current size of the company. Another term for this is the Sales Run Rate. In general, the run rate uses the current financial information, such as present sales and present revenue, to forecast performance. As it extrapolates the current financial information and performance there is an implied assumption that the present financial environment will not change significantly in the future. Revenue Run Rate Formula Run Rate = Revenue in Period  /  # of Days in Period  x  365 The Revenue Run Rate takes information on present financial performance and extends it over a longer time period. Consider the following example: Company XYZ generates revenue of $5 million in the first quarter of 2017. The company’s president wants to find out how much revenue his company is likely to generate for the rest of the year if conditions don’t change. He can use the Revenue Run Rate for this purpose. In this case, Company XYZ is operating at a Revenue Run Rate of $20 million a year. When a company uses the data currently available to make projections about future financial performance for the whole year, the company is said to annualize the data. The above example is a case of the annualization of data. The benefits of calculating run rate Estimated earnings- Run rate calculations are an easy and fast method for gauging your company’s current and future financial health, assuming that sales continue along the same trajectory.  Estimate future growth- Having an idea of your company’s annual revenue run rate helps you predict your future cash flow needs.  Project future savings-You can use the revenue run rate to predict how well you expect to do for the following year. For instance, you can determine how much you will save and whether you can afford to make capital improvements or purchase new manufacturing equipment.  Make smart budgeting decisions- Understanding your revenue run rate helps you allocate a budget where necessary. For instance, if your revenue run rate predictions fall short of the past years, you can find ways to minimize expenses and boost sales.  Manage inventory – Accurate run rate calculations can help you manage your inventory better by ensuring you don’t overstock or run out of merchandise every other month.  Provides a benchmark for your company- You can use the revenue run rate benchmark to track your company’s progress and compare it to SaaS averages. Why Do Companies Use Revenue Run Rate? Revenue Run Rate can be a very helpful indicator of financial performance for a young company that has only been in business for a short period of time. Revenue Run Rate can be an especially powerful tool if the company is relatively sure that the financial environment won’t change drastically. The Risk of Using the Revenue Run Rate 1 Changes in the environment- The Revenue Run Rate, like all Run Rate figures, makes the critical and often unrealistic assumption that the financial environment will remain relatively unchanged in the future. The modern financial market is extremely unpredictable and fickle and making financial decisions solely on the basis of Run Rate type figures would be extremely foolish. 2 Seasonality- In addition, even if we discount the threat of sudden changes to the financial environment, the Revenue Run Rate and other Run Rate type figures can be very deceiving. Consider the case of seasonal industries. Retailers experience a massive rise in both Revenue and Profits in the month of December due to the winter holiday season. If retailers such as Walmart and Target use the revenue and profit figures from this period to construct Revenue Run Rates or Profit Run Rates, then their estimates would be greatly inflated. On the other hand, if they calculated their Revenue Run Rate during a slower season of the year, not factoring in the Christmas rush would produce deceptively low figures. 3 Changes in company performance- Revenue Run Rate and other run rate type figures are usually constructed based on the most recent available data and often do not account for events that could have caused a change in the financial performance of the company at a specific point in time. For example, technology firms such as Microsoft, Sony, and Apple tend to experience a rise in sales and revenue whenever they release a new product. How Revenue Run Rate and Annual Recurring Revenue (ARR) Are Different Since the revenue run rate is an annualized revenue projection, it is often confused with the annual recurring revenue (ARR). But they are different metrics. The annual recurring revenue (ARR) is the total annual contract value (ACV) of subscriptions in a SaaS business. In other words, it only accounts for revenue you can reasonably assume due to customer contracts. ARR is more commonly used than revenue run rate since it is a more stable predictor of revenue. However, ARR can’t show the complete picture of your revenue since it excludes one-time purchases and fees. So it is usually only used by companies with a subscription model. Businesses often use ARR to show growth rate over time by comparing each year’s recurring revenue.   What It Is Why Use It Business Type Revenue Run Rate Annual revenue based bookings from subscription sales. Projecting future revenue for non-annual contracts or non-subscription revenue streams. Any business and business model can use the revenue run rate metric. Annual Recurring Revenue Annual revenue based bookings from subscription sales. Gauging the top-line health of

The State Government levies the professional tax on the professionals and members. The levy and governance of professional tax in Rajasthan is regulated under the Rajasthan State Tax on Professions, Trades, Callings and Employments Act, 1975. Understanding Professional Tax in Rajasthan Professional Tax is an important form of tax levied by the state government on individuals engaged in professions, trades, or employment. It is a source of revenue for the government and helps in funding various welfare programs and infrastructure development. In the state of Rajasthan, Professional Tax Registration is mandatory for certain categories of individuals, and compliance with the tax regulations is crucial. Importance of Professional Tax Registration in Rajasthan Revenue Generation for State Development: Professional Tax acts as a vital source of revenue for the state government. The funds collected through this tax are utilized for various development initiatives, infrastructure projects, and welfare programs that benefit the citizens of Rajasthan. Legal Compliance and Avoidance of Penalties: Non-compliance with Professional Tax regulations can lead to penalties and legal consequences. By registering and fulfilling tax obligations, individuals can avoid penalties and ensure compliance with the law. Contribution to Welfare Programs: Professional Tax serves as a means for individuals to contribute to the welfare programs implemented by the government. These programs aim to improve the quality of life, education, healthcare, and social services provided to the people of Rajasthan. Eligibility to pay Professional Tax in Rajasthan The individuals and entities falling in the below category are eligible to pay Professional Tax- Anyone with a professional tax registration Entities with a professional tax liability of more than Rs 50,000 must file a monthly professional tax return before the last date of each month. If the tax liability is not exceeding Rs. 50,000 for the entities in the previous year, it must file a tax return by March 31. Documents required for Professional Tax Registration in Rajasthan Identity proof- Aadhaar card/PAN card, etc. Address proof- Aadhaar card/Voter ID, etc. Proof of business registration (in the case of business owners) Proof of employment (in the case of employees) Bank account details Passport-sized photographs Any other documents specified. Registration Process for Professional Tax in Rajasthan Determine Applicability: The first step is to determine whether you fall within the ambit of Professional Tax in Rajasthan. This tax applies to individuals falling under Schedule I of the Rajasthan Professional Tax Act, 1976. The schedule includes various categories of individuals such as professionals, business owners, employers, employees, and freelancers. Obtain Registration Form: Once you have determined your liability for Professional Tax, you need to obtain the registration form. The form can be obtained either online through the Rajasthan Commercial Taxes Department website or by visiting the local Professional Tax Office. Complete the Registration Form: Fill in the registration form with accurate and relevant information. The form typically requires details such as name, address, contact information, nature of the profession, income details, and the number of employees (in the case of employers). Submit Required Documents: Along with the registration form, certain documents need to be submitted. Pay the Required Fees: Along with the registration form and documents, the prescribed registration fees must be paid. The fee amount may vary depending on the nature of the profession or trade. Verification and Issuance of Certificate: After submitting the registration form and fees, the concerned authorities will verify the provided information and documents. Upon successful verification, a Professional Tax Registration Certificate will be issued. This certificate is an important document and should be retained for future reference. Exemptions and Deductions Certain categories of individuals may be eligible for exemptions or deductions under the Professional Tax regulations in Rajasthan. These exemptions are designed to provide relief to specific professions or income groups. The exemptions and deductions can include: Exemptions for Low-Income Earners: Individuals falling below a certain income threshold may be exempt from paying Professional Tax. The income slabs and exemptions are determined by the government and are subject to periodic revisions. Specific Profession-Based Exemptions: Certain professions or trades may be exempt from Professional Tax based on government policies and notifications. These exemptions are typically granted to encourage specific industries or professions. Penalties for Non-Compliance Non-compliance with Professional Tax regulations in Rajasthan can attract penalties and legal consequences. It is crucial to understand the potential penalties to ensure adherence to the tax requirements. Some of the common penalties include: Late Payment Penalties: Failure to pay the professional tax amount within the specified due dates may attract penalties or interest charges. Non-Filing Penalties: Neglecting to file returns or reports within the prescribed timelines can result in penalties imposed by the authorities. Other Legal Consequences: Persistent non-compliance or deliberate evasion of Professional Tax can lead to legal actions, including prosecution and imprisonment, as prescribed by the law. Compliance and Renewal Monthly Tax Deduction and Deposit: Employers are responsible for deducting the professional tax amount from employees’ salaries monthly. The deducted amount needs to be deposited with the appropriate authorities within the prescribed timelines. Filing of Returns and Reporting Obligations: Registered individuals, employers, and professionals may be required to file periodic returns or reports as per the regulations of the Rajasthan Commercial Taxes Department. These returns ensure transparency and accurate tax compliance. Renewal of Registration Certificate: The Professional Tax Registration Certificate needs to be renewed periodically as per the prescribed guidelines. Failure to renew the certificate within the specified timeframe may result in penalties or cancellation of registration. FAQs Who needs to register for Professional Tax in Rajasthan? Professionals, traders, and individuals engaged in various occupations and employments are required to register for Professional Tax in Rajasthan. Is there a specific Professional Tax Registration form for Rajasthan? Yes, there is a specific form for Professional Tax Registration in Rajasthan. The form may vary based on the type of entity (individual, partnership, company, etc.). Check the official website or consult with professionals for the correct form. What are the consequences of non-compliance with Professional Tax regulations in Rajasthan? Non-compliance with Professional Tax regulations may lead to penalties and legal consequences. It’s crucial